Innovation Strategy Flashcards
What is innovation?
The conversion of new knowledge into a new product, process or service and the putting of this new product, process or service into actual commercial use.
State the innovation dilemmas
1) Technology push vs. market pull
How far should a firm follow technological opportunity as against market demand?
2) Product vs. process innovation
How much should a firm invest in product innovation rather than process innovation?
3) Open vs. closed innovation
Should firms engage in open collaborative innovation networks or secretly contain innovation within the boundaries of the firms?
Explain Techhnology push v Market pull dilemma
(What is tehcnology push? What is market pull? What are lead users? what is frugal innovation?)
- Technology push is the view that it is the new knowledge created by technologists or scientists that pushes the innovation process.
- Market pull is the view that it is the pull of users in the market that is responsible for innovation.
- ‘Lead users’ : pull from leading customers (e.g. the demands of elite surgeons for particular medical devices or implements).
- ‘Frugal innovation’: pull exerted by ordinary consumers, particularly the low-income people in developing countries
What is product and process innovation?
- Product innovation relates to the final product (or service) to be sold, especially with regard to its features.
- Process innovation relates to the way in which a product is produced and distributed, especially with regard to improvements in cost or reliability.
What do maturing/developing industries prefer in terms of product and process innovation?
Maturing industries prefer process innovations as they can take it and make it cheaper
New developing industries prefer product innovations a
Open/Closed innovation?
Open - deliberate import and export of knowledge by an organisation in order to accelerate and enhance its innovation.
Exchanging ideas openly is seen as likely to produce better products/services more quickly.
Closed - traditional approach relying on own internal resources. Innovation is secretive, anxious to protect intellectual property and avoid competitors’ free-riding on their ideas.
What are the hard decisions managers have to decide on when it comes to innovation strategy?
1) the relative emphasis to put on technology push or market pull;
2) whether to focus on product or process innovation;
3) how much to rely on ‘open innovation’ and related ecosystem or more ‘closed innovation’.
What is diffusion in terms of innovation?
process in which innovations spread amongst users
What can managers do that influence diffusion both supply wise and demand wise?
Supply - Offer ability to test product/service (experimentation)
Performance improvement (2x faster etc)
Compatability - more compatible more quicker diffusion
Demand - marketing campaign, Creating bandwagon effect by targeting customers with highest propensity to adopt e.g. early adopters/young wealthy, Through their network
What can managers do that influence diffusion both supply wise and demand wise?
Supply:
* Offer ability to test product/service (experimentation)
* Performance improvement (2x faster etc)
* Compatability - more compatible more quicker diffusion
Demand -
* Marketing campaign
* Creating bandwagon effect by targeting customers with highest propensity to adopt e.g. early adopters/young wealthy
* Through their network
What is the s-curve?
Curve showing diffusion where it reaches a tipping point and mass people start adopting.
This continues until it drops off and theres new tech etc.
What is a first-mover and what are the advantages?
First-mover advantage exists where an organisation is better off than its competitors as a result of being the first to market with a new product, process or service.
Adv: Reputation, Experience S-cure of people, Pre-emption of scare resources, Network effects
What are the advantages of being a late mover?
- Imitating the first-movers strategies and finding how to do it cheaper
- Learning without the cost: Learning from early adopters mistakes
What did Costas and Paul from London Business School say is the best time to adopt a new radical innovation?
Be a fast second mover
E.g. imitate the first mover before others.
As they dominant the second generation of competitors. E.g. Amazon Kindle.
What are the factors between choosing whether to imitate or innovate?
- Capacity for profit capture: Are there competitors who could imitate companys innovation quickly?
- Complementary assets: Can the business scale up? or is it hard.
- Fast-moving arenas: How hard is it for competitors to copy the companies innovation?
